Floods and disease. Severe weather events. Food insecurity. Increasing emissions. We’re already in the midst of climate upheaval. This year has provided bitter evidence that the effects of climate change are disastrous, with floods in UAE and Oman and a “heat dome” that pulverized previous temperature records across the MENA region.

While these overwhelming effects have made governments boost climate change awareness and action, building the most impactful solutions requires an entire ecosystem. 

The ecosystem needs to be transformed to become as near carbon-free as possible. This will only work if governments and businesses lead a substantive research and development effort to explore the necessary technologies and solutions.

INNOVATION WILL SAVE US

It will be innovation that will save us. Innovations in energy production, decarbonizing industries, capturing carbon, developing new insurance products, and protecting food and water systems. 

“The need for climate innovation in the Middle East is growing rapidly,” says Sascha Treppte, Partner at Kearney Middle East & Africa – Lead of the Center for a Sustainable Future. “Rising temperatures, extreme weather events such as the storm that hit the UAE in April with record rainfall, and water scarcity are creating a pressing need for innovative solutions. Economic and environmental factors drive a growing interest in climate-focused technologies and innovation.”

How we adapt to meet these challenges should be seen as an opportunity rather than just a pragmatic necessity. Investing in climate innovations, when executed thoughtfully, transcends the conventional notion of mere “flood or heat protection”.  

“Governments in the region recognize the urgency to act now and are mobilizing green agendas, setting ambitious renewable energy targets, and boosting investments in green technologies to accelerate the transition,” says Joseph Anis, President and CEO of GE Vernova’s Gas Power business in Europe, Middle East, and Africa. 

“The UAE’s Net Zero by 2050 initiative, Saudi Arabia’s goal to reach net zero by 2060, and the sustainability targets set by other countries across MENA show how places long associated with fossil fuels are prioritizing the transition to a lower carbon intensity energy future while advancing progress.” 

However, Anis adds that building a thriving climate innovation ecosystem requires going beyond government-led initiatives. 

Important initiatives have been launched in countries across the region. For example, in terms of intellectual property generation, initiatives like the Startups-IP Matchmaking Pilot from Hub71 connect startups with university intellectual properties, accelerating product development and reducing R&D costs. Flat6Labs runs accelerator programs in Jordan, UAE, and Saudi Arabia to support new startups.

That’s a good start, but work must be done on other building blocks, such as funding, developing green talent, and new technologies. Building climate innovation ecosystems at scale needs a focus on several core areas.

“The Middle East is one of the regions that will be the most impacted by climate change, whether due to physical or transition risks. This means it needs to be at the forefront of innovating solutions,” says Wissam Yassine, Partner at Bain and Company Middle East. 

Although the region is already taking serious steps to address climate change, with 60% of its emissions under the net zero pledge, Yassine says more needs to be done.

“About 35% of the emissions reduction needed to achieve net zero by 2050 will be through technologies that are not invented or not commercialized today, providing a tremendous opportunity for the region to innovate those solutions and scale existing technologies,” adds Yassine. 

It’s not possible to have a successful climate innovation ecosystem without new technologies, says Anis. “These two concepts are mutually dependent. This was evident at COP28 in the UAE, where stakeholders came together to discuss regulations, set targets, and cement an approach to incentivize companies to innovate and deploy sustainable and more efficient technologies.”

A HOLISTIC THINKING

To develop innovative climate solutions, we need experts from corporate, government, and scientific domains, a multidisciplinary workforce, and huge public and private funding. 

“One of the biggest game changers in this era needs to be elevating the role of partnerships: companies partnering with each other, the government, NGOs, academia, and others, towards shared goals. This is the true catalyst towards action and progress,” says Anis. 

“Collaboration can facilitate sharing resources, expertise, and risk and accelerate the development and deployment of climate-friendly technologies. Synergistic partnerships can unlock new opportunities, contribute towards developing a skilled workforce, and create a more resilient, sustainable future for all,” he adds. 

A network of institutions and individuals must collaborate for climate innovations to enter the market. The research, investment, talent, policy frameworks, incentives, customer education, and access needs are enormous.

A regenerative innovation ecosystem demands a holistic, forward-thinking approach, according to Treppte. This approach encompasses three key elements – government leadership and investment to establish clear policies while promoting investment in research and development; education and capacity building to foster skills training, entrepreneurism, and public engagement and collaboration to foster joint initiatives, knowledge sharing, and policy harmonization, transcending siloed efforts to catalyze climate action and foster collective progress. 

GREEN TALENT AND FUNDING

The transformation of the ecosystem will require workers with specialized skills, such as environmental engineers to help corporations measure and reduce carbon footprints, agricultural experts to redesign farm practices, and material scientists to innovate more sustainable products.

In the region, governments need to attract green talent and entrepreneurs with the right programs (incentives, access to funding, education), but more importantly, Treppte says, they need to support them with demand-related challenges to help them scale.

“Entrepreneurs often struggle to access large companies and face skepticism about their innovations. Governments can actively support climate innovation by implementing policies prioritizing the procurement and usage of climate tech products, ensuring that small businesses aren’t disadvantaged by a lack of extensive track records.”

Climate innovation is competing for funding against a raft of other projects, from education and healthcare to building infrastructure. Budgets are stretched; building climate innovation ecosystems will create additional financial stress. Traditional funding mechanisms are falling short of providing the needed investment, and the budget gap will only grow.

“The region can work towards improving access to funding, “ says Treppte. While venture capitalists in the region, such as Mubadala Ventures, Wamda Capital, and Flat6Labs, play a crucial role in funding and supporting climate innovation, the public sector needs to play a more important role in mobilizing the necessary funding, alongside large corporations, which often have limitations in investing in risky ventures or green innovation in-house due to shareholders’ pressure and lack of a tool that enables them to connect with credible entrepreneurs in this space, he adds. 

“Access to capital is a critical piece of the puzzle – the energy transition will be limited without sufficient funding,” says Anis.

Anis adds that export credit agencies (ECAs) play a leading role in supporting new technology advancements, providing financial institutions with comfort in backing new technologies. “ECA willingness to address technology risk can be key to facilitating the commercialization of decarbonization technology and projects.”

“Financing was a large part of the conversation at COP28, where the world united on Loss and Damage funding to make climate finance more accessible and bridge the investment gap in emerging markets and developing economies​​.”

Another area of focus is urban spaces. Innovation can help supercharge and mitigate environmental damage while empowering humanity to cause less harm in the coming years.  Dr Maged Marie, CEO of Magnom Properties, says the built environment is the crucible that will drive the sustainability of the ecosystem. “Through integrating technological innovations alongside sustainable practices, we need to ensure every step we take today is targeted towards mitigating the ills of climate change.” 

RIGHT ENABLERS

It’s essential to recognize that no country or organization has all the solutions to the climate crisis. All have much to learn from each other. By sharing knowledge and practices across geographies, countries can enhance the capacity to build resilient, adaptive ecosystems. This openness to learning across regions will enable innovative climate solutions and build a more unified response to a challenge that affects all.

“The region has the right enablers to be world leaders in sustainable solutions innovation,” says Yassine.”Specifically, the availability of low-cost finance; existing infrastructure to build up the energy trade; and nimble and decisive leadership, enabling the derisking of large and innovative projects.”

He adds the confluence of these factors can enable the region to leapfrog on the new energy economy and continue its pivotal role in the global energy value chain. “Albeit with a broader product basket including O&G with CCUS, green or blue hydrogen, synthetic fuels such as SAF, and further downstream products including green/blue ammonia, chemicals, and steel.”

In addition, the Middle East has great potential for producing renewable energy, CCUS, and clean hydrogen. For example, Yassine says that MENA receives 22–26% of all solar energy striking the Earth, wind conditions in 75% of the region are suitable for utility-scale wind farms, and vast tracts of unused available land are ideal for ramping up renewable solar and wind production. The region has an estimated storage capacity of 170 Gt CO2, one of the highest in the world.

“These factors also lead to a globally competitive production cost for green/blue hydrogen and synthetic fuels such as SAF (using point-source CO2 capture).” 

Climate innovation isn’t just a challenge; it’s an opportunity to reimagine living. The region can define its future by embracing innovative financing, climate technologies, nature-based solutions, and community engagement. 

“Even as the journey to achieving net zero greenhouse gas emissions in the Middle East is gathering momentum, we need more collaboration between governments, stakeholders, and private entrepreneurs to drive a more robust ecosystem for climate innovation,” says Dr. Marie. 

Building fool-proof climate innovation ecosystems, with sustainable energy as an important focus, will offer the region a second chance.